How Commercial Lenders Went Wrong With Small Business Financing

Small business owners

Will Be Likely to Avoid more serious problems with future business finance working capital management and commercial real estate loans by exploring what went wrong with business financing and business lending. This is not a hypothetical issue for MOST business borrowers, If They particularly need help with small business financing Determining Practical Choices That Are available to ?em. The banks and bankers responsible for the recent meltdown Financial Seem To Be Saying That Even If anything went wrong Actually, everything is fine now in the world of Commercial Lending. Nothing Could Be Further from the Truth. Commercial lenders made serious mistakes, and According To a popular phrase, if business lenders and business owners forget thesis mistakes, doomed to repeat They Are ?em in the future.

Greed Seems To Be A common theme for Several of The Most serious business mistakes made by financial institutions Many lending. Were unsurprising negative results produced by the Attempt to Produce quick profits and higher-than-normal returns. The bankers Themselves Seem To Be The Only Ones Surprised by the devastating Losses That THEY Produced. The Largest small business lender in the United States (CIT Group) Declared bankruptcy After Two Years of Attempting to get to pay for Someone else Their mistakes. Already we are seeing a record level of bank failures, and by MOST Many accounts of the banks Largest Should Have beens Were Allowed to Fail purpose INSTEAD supported by artificial government Funding. When making loans or buying securities as Such Those now Referred to as toxic assets, There Were Many instances in Which banks failed to look at cash flow. For Some Small business finance Programs, Stated Income Commercial loan has underwriting process WAS Used In Which business tax returns borrower Were Not Even gold Requested Reviewed. One of the MOST prominent business lenders aggressively using this approach WAS Lehman Brothers (Which filed for bankruptcy due to a number of questionable dealings Financial). Bankers obsessed with quick profits Generating Frequently lost sight of a basic investment principle That asset valuations Cdn Decrease Quickly and do not always it increase. Many business loans Which Were Finalized in the business borrower HAD little or no equity at risk. Banks Invested Almost nothing in cash (as little as cents on the dollar Three) When future buying toxic assets. The apparent assumption WAS That if Any downward fluctuation in value Occurred, it Would Be a token Three to five percent. In Fact We Have now seen Many commercial real estate capital gains Decrease by 40 to 50 percent During The Past Two Years. Commercial real estate is proving to Be the next toxic asset on Their balance sheets for The Many banks Which made the original business Such mortgages are business properties. While huge government bailouts There Were to Have Which banks toxic assets based on residential mortgages, it is bad at banks That Will receive Financial Assistance to cover commercial real estate loan losses. As a result, a realistic expectation Is That Such commercial finance Losses Could Produce serious problems for Many banks and Other lenders over the next Several years. As Noted in the Following paragraph, Many lenders drastically Already Have Reduced Their small business finance programs. Inaccurate and misleading statements by business lenders About their lending activities for business finance small business owners to Programs is a year Ongoing problem. Although banks reporting beens Typically Have That They Are With Their lending Normally small business financing, the actual results Indicate something very different By Any objective standard. It Is Obvious That lenders injustement Would not admitted Publicly That They Are not Lending Normally Because of the negative public relations impact Would this cause. Business owners Will Need To Be skeptical and cautious efforts to secure In Their small business financing Because Of Particular this result alone. There are Practical and realistic small business finance solutions available to business owners in Spite of the inappropriate business lending practices just Described. The emphasis here is Focusing on the problems the solutions Rather Than Primarily Because of the lingering notion by Some That There are not significant current Commercial Lending problems. Despite Contrary views from bankers and Politicians, AP?NDICE Would Collectively MOST AGREE That the multiple mistakes made by banks and Other Commercial lenders and are serious Were Likely To Have long-lasting effects for business borrowers.
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Stephen Bush is Chief Executive Officer of AEX Commercial Financing Group and is a small business financing expert. Steve Provides working capital management strategies for small business owners Throughout The United States. Please contact Steve for Practical and candid advice about commercial real estate financing, working capital loans and merchant cash Advances.

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